Accounting Reforms and Financial Health: Which Effects on Municipal Governments? The Case of Italy

Abstract

Financial health is a necessary condition under which governments must operate, and is one of the goals of NPM. While there has been a closely spaced succession of NPM-like reforms in the last twenty years, there are several indications that suggest Italian municipal governments' financial health has deteriorated in the last few years. In this study we conduct a statistical analysis using an official dataset that includes all the Italian municipal governments accounts from 2000 to 2007. We aim at studying the trend of the financial health of Italian municipal governments. We conclude that during these height years improvements are limited to a narrow number of municipal governments, usually located in the North and with a population of less than 5.000 inhabitants, while Southern municipalities have worsened, even severely, their financial health. This suggests a call for a future agenda focused at facing the progressive detriment of financial health dimensions of the majority of municipalities of the South.

Keywords: Municipal Governments, Financial Health, Accounting Reforms, New Public Financial Management, Performance Measurement, Italy

JEL Classification: H83, M48